Correlation Between Silicon Motion and X FAB
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and X FAB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Silicon Motion and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and X FAB Silicon Foundries, you can compare the effects of market volatilities on Silicon Motion and X FAB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Silicon Motion with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and X FAB.
Diversification Opportunities for Silicon Motion and X FAB
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silicon and XFB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Silicon Motion is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Silicon Motion Technology are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Silicon Motion i.e., Silicon Motion and X FAB go up and down completely randomly.
Pair Corralation between Silicon Motion and X FAB
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the X FAB. In addition to that, Silicon Motion is 1.14 times more volatile than X FAB Silicon Foundries. It trades about -0.17 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.02 per unit of volatility. If you would invest 500.00 in X FAB Silicon Foundries on October 16, 2024 and sell it today you would earn a total of 1.00 from holding X FAB Silicon Foundries or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Silicon Motion Technology |
| X FAB Silicon |
Silicon Motion and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and X FAB
The main advantage of trading using opposite Silicon Motion and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, X FAB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in X FAB will offset losses from the drop in X FAB's long position.| Silicon Motion vs. Platinum Investment Management | Silicon Motion vs. Jupiter Fund Management | Silicon Motion vs. Eidesvik Offshore ASA | Silicon Motion vs. Cleanaway Waste Management |
| X FAB vs. CHRYSALIS INVESTMENTS LTD | X FAB vs. JLF INVESTMENT | X FAB vs. Playa Hotels Resorts | X FAB vs. Hyatt Hotels |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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